Growth of Multi-Channel and Omni Channel Payments
By Scott Blum, vice president, Total Merchant Services
A shift in shopping is occurring, and small business retailers need to adopt a strategy to keep up with the shift. The shift is being driven by the rise of the smartphones, like the iPhone, the speed of telephone networks, the growth of online shopping, and growth of new payment types like Apple Pay and EMV. A few figures demonstrate the growth of these areas:
- eMarketer estimates that there will be 190.5 million US smartphone users of all ages this year, representing 73.4 percent of internet users and 59.3 percent of the population. By 2019, the smartphone audience will reach 236.8 million.
- The number of consumers browsing and buying online will hit 270 million by 2020, driven largely by activity on mobile devices.
- More than 100 million people will make an NFC mobile payment in 2016. Growth in payments are the following:
The growth of smart phones, online purchases, NFC payments, and other trends is driving changes in consumer shopping behavior. A recent survey by WSJ/comScore indicated the following regarding shopping behaviors:
Share of purchases made online:
- 2014: 46%
- 2015: 48%
- 2016: 51%
How purchases are made:
- Research online and in store, buy in store: 22%
- Search and buy online: 42%
- Search and buy in store: 20%
- Research online and in store, buy online: 16%
Purchasing on a smartphone by generation:
- Millennials: 63%
- Gen Xers: 41%
- Baby Boomers: 19%
- Seniors: 8%
Source: WSJ/comScore online survey conducted between January 30 and February 9, 2016 with 5,330 respondents.
These facts also support the growth of these areas.
In order to respond to the changes in consumer shopping behavior, retailers are changing the way they do business and are embracing an omni-channel approach. They are utilizing new strategies, such as driving engagement with the customer via loyalty programs, enabling the customer to make purchases whenever and wherever they want, and servicing the customer with new shopping experiences. This model of engagement, enabling, and servicing customers can be broken down as follows.
Engage the Customer: These are strategies merchants are enacting to drive customers into their store or online, including loyalty programs, contextually relevant offers, and leveraging data to make relevant product recommendations. Examples of engagement include Subway locations that created a location-based loyalty program offering a 6-inch sandwich the first time customers register and connect to free in-store WIFI, retailers promoting products on Instagram, and CVS working with Google to pilot the new beacon program called “Nearby,” which sends out push alerts to Android device users through a pre-installed Google Play app.
Enable the Customer: These are tools merchants are deploying to arm the customer with the ability to shop and buy whenever and wherever they want, including apps, enabling various payment types, location-based services, and the ability to shop and buy regardless of channel. Features of this include receiving online purchases or buying online, and then picking up the product at a store. An example is a new Sam’s Club mobile application that allows shoppers to scan UPC codes on items they want to purchase as they load them into a cart and enables them to pay directly on their phone from anywhere in the store and skip the check-out line.
Serve the Customer: These are new ways merchants are stepping out from behind the counter to deliver new shopping experiences, such as mobile point-of-sale.
Although there is a strong reason for merchants to adopt an omni-channel strategy, many have not done so. According to a recent survey from ACI Worldwide,
- Only 21 percent of merchants have completed an omni-channel payments platform,
- 46 percent of retailers have no plans for omni-channel payment in the next 12 months, and
- 29 percent do not have current plans to start an omni-channel payments strategy.
The key challenges cited by retailers are incompatible systems, challenges with data integration, inventory management, fraud prevention, payment security and PCI compliance, EMV, and the ability to support multiple payment types.
Groovv was launched as a new product that enables small merchants to adopt many of the aspects of an omni-commerce platform. The recently launched product comes in two flavors (All In One and Flex). The solution enables omni-commerce capabilities right out of the box for small merchants, including the following features that enable a small business to overcome several obstacles related to omni commerce.
- Easy Inventory Management: Items can be organized for sale with customer categories and modifiers, and sales can be tracked when items run low.
- EMV/NFC Enabled: Accept all payment types, including chip cards, magstripe cards, and NFC payments like Samsung and Apple Pay.
- Marketing: Integrated marketing built into the software, including a rewards and loyalty program, store locator, and geo-fenced beacon technology to push offers to nearby customers.
- PCI Payment Compliance: Full PCI compliance with an end-to-end payment solution.
About the Author
Scott Blum leads Marketing, Business Development, and Integrated Payments for Total Merchant Services. Scott has served in a variety of executive leadership roles for financial technology companies, including Chief Marketing Officer for CAN Capital and Director of Marketing and Global Payments for Intuit. Scott was also a management consultant for Deloitte Consulting. Scott has an undergraduate degree from UCLA and an MBA from the Wharton School.
Founded in 1996, Total Merchant Services (Total) has helped more than 500,000 small-and-medium-sized businesses with their payment processing needs, and the company currently processes more than $12 billion in credit and debit card transactions annually. Total has become a leader in the payments business by providing cost-effective solutions and exemplary service to help merchants and our sales partners succeed.Long known for placing free payment terminals, Total introduced its Groovv product line to provide a comprehensive suite of sales, payment, processing, marketing and business management solutions.